Myners admits new pensions could leave some worse off

Click to follow
The Independent Online

Paul Myners, chairman of the Personal Accounts Delivery Authority (Pada), has conceded that the Government's plans to auto-enrol employees into a national pension scheme could leave some people worse off.

Speaking at the National Association of Pension Funds conference in Edinburgh this week, Mr Myners admitted that the current structure of means-tested pensions benefits could mean that some people would be better off not saving than they would be if they put a small amount of money into the new personal accounts scheme.

However, comparing the situation to the introduction of mandatory seat-belt usage in cars, he claimed that the vast majority of people would be better off.

"There are a small number of people whose injuries are increased and even somepeople have died because they were wearing seatbelts," he said, but added that the number of deaths and injuries avoided by wearing seatbelts far outweighed the risks.

"No system is capable of dealing with the uncertainty of unpredictable events in the lives of individuals, or the chaotic lives of some people," he said.

Meanwhile, pressure is mounting on Pada to give a clearer indication of how much the new personal accounts system is going to cost the public purse. Reports this week suggested the scheme could cost as much as £2bn to establish – a number which Pada refused to denyor confirm.

Personal accounts are due to be launched in 2012, and will ensure that every employee over the age of 22 is automatically enrolled into a pension plan. Although there has been broad political and industry support for the scheme, there remains much controversy over how it will be implemented.

Earlier this week, Fidelity International, the fund management group, published research suggesting that more than 300,000 people would lose their existing pension provision as a result of personal accounts, as companies closed down their existing and more generous pension plans in favour of the lesser personal accounts scheme.

Simon Fraser, president of the investment solutions group at Fidelity, commented: "The Government's original intention for personal accounts was to 'complement rather than compete' with existing provision, but our findings reveal that this will not be the case.

"There is clearly some confusion for companies not knowing what to do next. We recognise that everyone is striving for the same goal but action needs to be taken now to mitigate the risk of the pension crisis deepening."

Comments